Copyright and “Grey Market” Goods: Internationalization of First Sale

Copyright and “Grey Market” Goods: Internationalization of First Sale

The big news in copyright law from the last 6 months is the Supreme Court’s decision in Kirtsaeng v. John Wiley & Sons, Inc., in which the Court held that the first sale doctrine applies, to protect the private resale in the US of textbooks purchased lawfuly outside the U.S. The first sale doctrine of the Copyright Act permits the owner of a “lawfully-made” copy of a copyrighted work to resell it. Here a student purchased textbooks from stores in Thailand, which had been lawfully made under a license from the publisher, Wiley. The student resold the books in the U.S. for a profit, and Wiley sued for copyright infringement, and the lower court found for Wiley and awarded “statutory damages” under the Copyright Act (statutory damages can add up – they allow awards of up to $30,000 per “act of infringement” and $150,000 per act of “willful” infringement), which was upheld by the 2nd circuit court of appeals.

The Supreme Court agreed with Kirtsaeng that the books were “lawfully made under the Copyright Act” because they were printed pursuant to a valid license agreement between Wiley and the Thai publishing company. It didn’t matter that the printing took place outside the United States, and therefore the first sale doctrine applied to protect the subsequent resale in the U.S. by an owner of the books.

For the long term, it remains to be seen how significant this expansion of the first sale doctrine really is. Distribution of books in digital form has expanded like crazy, and there is no first sale doctrine for a digital work, so we’ll see.